As U.S. regulators search for a buyer for the remains of SVB Financial Groupthey will work to find a home for the sprawling commercial banking operations, a wealth management unit, an investment bank and a fund manager.
Bank of Silicon Valley was seized by regulators on Friday amid a scramble for filings and a failed push to raise capital. The Federal Deposit Insurance Corp. now aims to find buyers for the various activities of the company in order to make as much of the customers’ money as possible.
Big banks are likely to at least explore buying SVB companies given their manageable size and the attractive customer base of tech companies and their wealthy founders. The bank was defeated by hoarding bonds just before the rate hike and a concentrated depositor base, but had posted profits every year before its rapid fall.
Still, the FDIC’s statement on Friday did not indicate a likely quick sale of the entire company. The regulator said it would issue an early dividend to uninsured depositors over the next week, with future payments possibly coming as asset sales occur.
The bank held about $212 billion in assets at the end of the year, a figure that has certainly fallen since then as the company sold holdings to raise funds and depositors withdrew their funds. More than half of the bank’s assets were in a bond portfolio, a setup that led to losses when rates rose but should be relatively simple to offload.
The company had more than 8,500 employees as of December 31, according to its annual filing. With dozens of offices around the world, the company operates in the United States and Canada, as well as the United Kingdom, Europe, Asia and the Middle East. The Bank of England on Friday announced plans to declare the UK unit insolvent in separate proceedings.
Here is an overview of SVB’s operating segments:
Bank of Silicon Valley
SVB’s commercial bank has become known in California as a banker to private equity and venture capital firms, specializing in technology and healthcare. It reported a profit of $3.4 billion for 2022, when it had about $172 billion in deposits. Its revenue of $5.23 billion was about 84% of the company’s total for 2022.
Most of the company’s loans were to private equity and venture capital funds, and it specialized in call lines of credit. These lines give venture capitalists the ability to tap into money to immediately invest in a startup, then repay after they receive the money that pension funds and other investors have previously pledged to put into their funds.
The investment bank touts its services to companies in industries including software, digital infrastructure, fintech, medical devices and biopharma. He advised about $9 billion in M&A deals last year, ranking 83rd in the world, according to Bloomberg’s league tables. The unit recorded a loss of $95 million in 2022 on revenue of around $508 million.
The fund manager focuses primarily on venture capital investments and was managing $9.5 billion at the end of December. Its funds generate investment returns and management fees for SVB.
This unit suffered from the tougher environment for technology investments last year, posting a pre-tax loss of $180 million, compared to profits in 2021 and 2020.
SVB’s smallest unit by revenue, it includes high-net-worth clients recruited through the 2021 acquisition of Boston Private Financial Holdings. The company had $17 billion in client assets, which would be a small addition for giants managing trillions.
The private bank and wealth manager offers conventional products such as mortgages, lines of credit and tax and trust services. Also the less conventional, such as wine development credits.
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